ESCA WACC - Weighted Average Cost of Capital
The WACC of Escalade Inc (ESCA) is 7.9%.
| Range | Selected | |
| Cost of equity | 7.3% - 9.5% | 8.4% |
| Tax rate | 20.9% - 21.3% | 21.1% |
| Cost of debt | 4.5% - 5.4% | 4.95% |
| WACC | 6.9% - 8.9% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.76 | 0.83 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.3% | 9.5% |
| Tax rate | 20.9% | 21.3% |
| Debt/Equity ratio | 0.12 | 0.12 |
| Cost of debt | 4.5% | 5.4% |
| After-tax WACC | 6.9% | 8.9% |
| Selected WACC | 7.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ESCA | Escalade Inc | 0.12 | 0.67 | 0.61 |
| BC | Brunswick Corp | 0.6 | 0.28 | 0.19 |
| CLAR | Clarus Corp | 0.01 | 0.77 | 0.76 |
| LEAT | Leatt Corp | 0.01 | 1 | 0.99 |
| MAT | Mattel Inc | 0.35 | 0.81 | 0.63 |
| MCFT | Mastercraft Boat Holdings Inc | 0.15 | 0.99 | 0.89 |
| NLS | Nautilus Inc | 0.96 | 1.59 | 0.91 |
| SWBI | Smith & Wesson Brands Inc | 0.29 | 0.5 | 0.41 |
| TVPC | Twin Vee Powercats Inc | 0.07 | -0.09 | -0.08 |
| VSTO | Vista Outdoor Inc | 0.28 | 0.65 | 0.54 |
| Low | High | |
| Unlevered beta | 0.58 | 0.68 |
| Relevered beta | 0.64 | 0.75 |
| Adjusted relevered beta | 0.76 | 0.83 |
ESCA's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for ESCA:
cost_of_equity (8.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.76) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.